Question

A, B and C were partners sharing P & L in the ratio 5:3:2. A died on 30th June, 2019. Entry for treatment of goodwill after his death was passed as follows:

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	B’s Capital A/c    ...Dr.		1,80,000
	C’s Capital A/c    ...Dr.		1,20,000
	To A’s Capital A/c			3,00,000
	(Entry for goodwill treatment passed at the time of death of partner)

A’s profit till date of death was estimated as ₹ 1,20,000, based on the average profits of past three years. Final dues payable to A’s executors on the date of death was calculated as ₹ 8,40,000 out of which ₹ 2,40,000 was paid immediately by giving him Furniture valued for the same and balance was to be paid in three equal annual installments starting from 30 June 2020, together with an interest rate as specified in Section 37 of Indian Partnership Act, 1932. Pass necessary entry for profit share to be credited to A’s Capital and also prepare A’s executor's account till final settlement.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2019 June 30	Profit and Loss Suspense A/c    ...Dr.		1,20,000
	To A’s Capital A/c			1,20,000
	(Being share of profit provided till the date of his death)

 

Dr.	A’s Executors A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
2019				2019
June 30	Furniture A/c		2,40,000	June 30	A’s Capital A/c		8,40,000
2020 Mar. 31	Balance c/d		6,27,000	2020 Mar. 31	Interest A/c		27,000
			8,67,000				8,67,000
2020 June 30	Bank A/c		2,36,000	2020 Apr. 1	Balance b/d		6,27,000
2021 Mar. 31	Balance c/d		4,18,000	June 30	Interest A/c		9,000
				2021 Mar. 31	Interest A/c		18,000
			6,54,000				6,54,000
2021				2021
June 30	Bank A/c		2,24,000	Apr. 1	Balance b/d		4,18,000
2022 Mar. 31	Balance c/d		2,09,000	June 30	Interest A/c		6,000
				2022
				Mar. 31	Interest A/c		9,000
			4,33,000				4,33,000
2022				2021
June 30	Bank A/c		2,12,000	Apr. 1	Balance b/d		2,09,000
				June 30	Interest A/c		3,000
			2,12,000				2,12,000